Tennessee Officials Consider Challenge to FCC Ruling

The commission's ruling overrides "restrictive state laws," allowing local broadband providers to expand their service to surrounding areas and make decisions regarding their own broadband future.

by Andy Sher, Chattanooga Times / March 5, 2015

(Tribune News Service) -- Some Tennessee Republicans are feeling burned by last week's Federal Communications Commission decision that overrides state law and allows Chattanooga's EPB to offer lightning-speed municipal broadband outside its service area.

"Our state sovereignty rights have been violated," charged Rep. Jeremey Durham, R-Franklin, on Tuesday as he and colleagues released a letter Tuesday urging state Attorney General Herbert Slatery to appeal the FCC's 3-2 ruling.

In a statement, Slatery said he is weighing options, noting "as we pointed out in our Feb. 5, 2015 letter to the [Federal Communications] Commission, even with purported authorization from the FCC, a local governmental power board would still need state legislative authority to expand its service area.

"We are disappointed the FCC would assert authority over a local governmental body, which is an area of responsibility resting exclusively with the state in which the local governmental body exists," Slatery added.

Republican Gov. Bill Haslam, who also urged the FCC not to override the state, told reporters he too is exploring whether to appeal the ruling.

"Before you decide to appeal you have to make sure there's a reasonable reason to do that," Haslam said following an appearance at Lipscomb University.

The "question obviously is, is the local government subsidizing something that makes it hard for a business to compete" against government, Haslam said. "Our job is to create a level playing field and to do everything to have a net gain for the state."

Still, the governor said, he doesn't know enough to say whether the municipal power distributors are using power revenues to help fund broadband and video services. EPB, which received a $110 million federal grant to lay fiber in its service area, has long maintained it does not cross subsidize.

Haslam also acknowledged there are rural areas of the state that don't have super-fast Internet service like the gigabit service offered by EPB.

In his statement last week on the decision, FCC Chairman Tom Wheeler said Chattanooga and Wilson, N.C., officials, who pushed the issue at the federal level, are being prevented from expanding their broadband networks to surrounding areas and making their own decisions about their broadband future.

"In Tennessee and North Carolina, and in 17 other states, community broadband efforts have been blocked or severely curtailed by restrictive state laws -- laws often passed due to heavy lobbying support by incumbent broadband providers," the chairman said.

Big providers like AT&T, Comcast and CenturyLink have had major influence on Tennessee's Legislature when it comes to public power distributors' years-long effort to offer video and broadband outside their service areas.

According to the National Institute of Money in Politics, telecommunications industry interests dumped $643,000 into campaigns in the two-year 2014 election cycle alone. AT&T contributed $211,000 to lawmakers with Comcast kicking in $137,000.

Figures compiled by the Times Free Press from reports filed with the Tennessee Registry of Election Finance show that AT&T contributed $20,000 during the election cycle to Republican Senate Speaker Ron Ramsey's leadership political action committee, RAAMPAC. AT&T President Joelle Phillips gave another $2,000.

And Republican House Speaker Beth Harwell's Harwell PAC received $17,000.

Both Harwell and Ramsey wrote letters to the FCC urging them not to intervene.

AT&T spent even more on its legislative lobbying efforts. The telecommunications giant's state Ethics Commission filings show it spent somewhere between $1.06 million to $1.32 million on lobbyists, lobbying expenses and entertainment expenses. The bulk of it was for as many as 13 lobbyists.

House Majority Leader Gerald McCormick, R-Chattanooga, said AT&T, Comcast and others "work very hard down here and do an effective job lobbying their positions, certainly. But I think they have a philosophical argument that I think goes very well, and that's the private company versus the municipality, which does resonate with a lot of members."

Still, McCormick said that although "I'd rather it [expansion] be handled at the state level ... I agree with the idea that EPB ought to be able to expand."

Chattanooga Mayor Andy Berke, who supports the FCC decision, said in an interview Monday that "the only state action we want to see is removal of all the state's laws that prohibit EPB from expanding their footprint."

Noting that nearby officials in Marion and Bradley counties want access to EPB's gigabit service, Berke said, "We know this is something people want in Tennessee and can help improve our regional economy."

Proponents argue for-profit companies won't serve areas unless they can make money.

Regarding the talk of appealing the FCC's decision, Nashville attorney Henry Walker, who specializes in telecommunications law, said at this point "nobody can make an intelligent decision about whether to appeal until they read the order."

A former general counsel at the old state Public Service Commission, Walker said "everybody's making this into a big constitutional/state sovereignty issue when all we're talking about are these people from Bradley County." He called it crazy to see this as some sort of "state sovereignty-let's-refight-the-Civil War" struggle.

Walker said "the governor and the legislators are concerned about having a level playing field between a government owned-utility and privately owned utilities and everybody shares that concern." He agrees.

If the FCC decision stands, Walker said, "then we need to rewrite the statutes and ensure the playing field is level and ensure the Tennessee Regulatory Authority is a referee."

©2015 the Chattanooga Times/Free Press (Chattanooga, Tenn.) Distributed by Tribune Content Agency, LLC